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Spike in housing starts brings glimmer of hope

Housing shows an unexpected increase as the number of new private projects doubles compared with this time last year. Max Thompson reports

Two new sets of figures reveal a surprise spike in housing starts, despite a backdrop of a 12 per cent slump in completions.

A rise in private and social housing starts of 50 and 11 per cent respectively compared with the same period last year was recorded by construction analyst Glenigan in the three months until November. This equates to about £3.3 billion-worth of new work.

With all eyes on the economy and the chancellor’s Autumn Statement, revealed on Wednesday, Glenigan economist Andrew Whiffin said the figures were good news for the housing sector.

He said: ‘The increased rate of new work seen in the Northern regions and Wales, combined with signs that house prices hit a bottom in the third quarter, are good indications that mortgage lending and development finance are finding their way to those who can make use of it.’

However, the upbeat Glenigan findings stand in stark contrast to figures released by the National House-Building Council (NHBC), which has recorded a drop in newly registered homes from 101,600 in 2011 to 89,600 in 2012.

Meanwhile, in the AJ State of the Profession Survey, (see first results, page 9), 42 per cent of architects said they expected work in the residential sector to increase over the next 12 months.

While the Glenigan results are encouraging, Nick Johnson, co-founder of Urban Splash, is not convinced: ‘Those figures don’t cross-check with what it feels like,’ said Johnson. ‘Maybe compared with a very bad period last year [there is an upturn], but the overall picture remains incredibly difficult.

‘Generally, small-scale private sector builders have no access to capital. House builders are keeping sites going but are building in small numbers for low margins.’

The NHBC found the South East had most housebuilding between August and October, with 4,638 registrations. Greater London had 3,701, Scotland 1,980 and Wales 1,041.

Industry reaction

Ziba Adrangi, director, PRP Architects

Ziba Adrangi

‘We have had a lot of enquiries in the past three or four months’

We have had a lot of enquiries in the past three or four months, so the government incentives must be having an effect.

The drop in completions must be linked to the 2008 crash, because a lot of things stalled then and didn’t happen.

A lot of things were nipped in the bud after the crash and that is why we are seeing fewer completions this year.

Chris Romer-Lee, Studio Octopi

Chris Romer-Lee

‘We’re busier than any time since the practice was established’

Studio Octopi’s private housing work continues to show steady growth, with a surge of enquiries since the end of the Olympics. There is a hint of returning confidence – at the very least some sort of stability – we find ourselves busier than at any time since the practice was established nine years ago.

The majority of enquiries are for new build and refurbs in London and the South East, with private residential being about 60 per cent of the practice’s work.

Dominic J Eaton, director, Stride Treglown

Dominic J Eaton

‘The real stumbling block [is] getting through planning’

It is clear that the government is looking into a number of incentives, such as the affordable provision and 106 agreements to help free up developable sites. But I don’t see that these are tackling the real stumbling block, which is the time spent getting through the planning process.

Planning has also become more onerous with regards to the amount of information and number of reports required. I have noticed recently that there is real euphoria in simply getting the application registered.

We are involved in a number of Homes and Communities Agency-owned sites, which tend to take a more collaborative approach to planning. On one site, which has just secured detailed planning approval, the design process was kick-started with a half-day workshop with everyone involved in the application, including the local authority, highways, police liaison, ward members and registered social landlords. This helped in the long term, bringing a ‘buy-in’ from everyone and a sense of ownership.

I feel this collaborative approach was instrumental in a smooth planning process and delivering a good scheme that is due to start on site in the new year.

I support the planning process, in that there needs to be control and guidance with regards to a local development plan and design. However, there needs to be a more pragmatic approach.

It’s not that the government hasn’t tried to stimulate supply, but more that their measures are taking time to filter through. Relaxing the rules requiring private housebuilders to incorporate social housing into large developments will be a big help.

Reducing the demands of Section 106 rules would also have a positive effect but, again, this is unlikely to happen when councils are having their funding slashed elsewhere. At this stage, it seems that these measures are not simple enough to implement.

In addition, although extra funding has been made available to developers, until the banks are prepared to lend to buyers at an interest rate and deposit level they can afford, there is not enough demand to encourage new houses to be built. There is little incentive for the banks to change their practices when they are now forced to keep funds aside to protect against future crises.

It is difficult to imagine things getting worse, since conditions outside London are so difficult at the moment. However, the already limited number of new homes being constructed will grind to a complete halt if we face another crisis of confidence (for example in employment figures or the Eurozone). So, yes, things could definitely get worse.

To boost house building the government needs a strategy that is simple and direct, like easier mortgage funding or a major Stamp Duty Holiday.

Andrew Beharrell, director, Pollard Thomas Edwards

Andrew Beharrell

‘The situation in the more depressed areas of the country is very worrying. It requires a more interventionist approach’

You cannot generalise about the situation across the UK. London is a world city, attracting international workers, visitors and investment, including direct investment in housing development.

Consequently the housing market appears to be very active in London. Central and local government should capitalise on this through development of their own under-used property assets.

Some are already adopting a more entrepreneurial attitude to identify housing land and potentially develop it themselves, taking advantage of liberalisation of local authority financing.

The situation in the more depressed areas of the country is very worrying and could take years to resolve. It requires a more interventionist approach, including transport infrastructure improvements, dispersal of central government departments and incentives for business relocation.

Chris Medland, director, One-World Design

Chris Medland

‘All the ingredients of the solution to the housing shortfall are being lined up by the current government, but in a drip-feed fashion’

With the necessary raising of sustainability standards, the issues of cost, quality and time are going to become even more challenging. All the ingredients of the solution to the housing shortfall and impending crisis are being lined up reasonably well by the current government, but in a drip-feed fashion.

A key part of the solution is build-to-let. Pension funds have billions to invest for long-term returns; therefore our design briefs will inherently have whole life cycle costing embedded within them, rather than the short-term view that, arguably, spec build developers have (for valid economic reasons).

This will lead to prioritising good, durable and sustainable design, which will need to maximise opportunities for renewables while minimising energy consumption.

Buildings will inherently be more future-proof, because it will be in the interest of the landlord for them to be so. This means that we all have to accept that home ownership, at least for now, may no longer be the norm for most people. A change in the way we view the housing market in the UK is what is required and it will take time for people to come around to the idea.

The stigma of renting needs to be washed aside. In this day and age it seems fitting to shed antiquated ideas of Englishmen and castles and let what you do and who you are be a measure of your success rather than where you live and whether you own your home.

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